HARTFORD, CT — A few days before their first court date, the Connecticut Education Association and five municipalities withdrew their lawsuit against the state that sought to challenge Gov. Dannel P. Malloy’s executive order.

Last week, Malloy signed a two-year, $41.34 billion state budget that allocated much-needed funding to cities and towns.

“On Tuesday, the governor signed the bipartisan budget into law, ending the draconian education cuts that jeopardized our students’ futures,” CEA President Sheila Cohen said. “With the new budget, millions in education funding will be restored to cities and towns across the state, and a new commission will help secure the equitable distribution of funds in the future.”

The new budget restores 95 percent of the education funding to a majority of cities and towns.

All the money Torrington would have lost was restored, and most of the money to Brooklyn, Plainfield, and Stratford was restored as part of the new budget.

The lawsuit argued that Malloy didn’t unilaterally have the authority to cut education funding to cities and towns so drastically. They argued they should receive the same amount they received the previous year through the budget impasse. The argument was based on a more than 125-year-old court decision and decades-old opinions from then-Attorney General Richard Blumenthal.

The new budget also created the Connecticut Achievement and Resource Equity in Schools Commission (CARES), which will provide expertise and recommendations regarding the distribution of state education funds to ensure that students in every community have the resources needed to succeed.

“We look forward to working with the CARES Commission members to develop a new ECS plan that provides a fair, reliable, sustainable, and equitable funding source for all students, regardless of where they live,” Cohen said.

The teachers union and the rest of the state are still awaiting a Supreme Court decision on the Connecticut Coalition for Justice in Education Funding lawsuit.

Oral arguments in the case were heard on Sept. 28. A lower court judge found the state’s application of the Education Cost Sharing formula was flawed.

As part of the two-year budget the state adopted a new formula, which legislators say will be applied in a more fair manner to all municipalities. The previous formula included carve outs for specific towns.